North American prices for polyethylene resin led a chaotic market in June.
A number of PE buyers in the region saw prices fall an average of 3 cents in June. Although the number of buyers seeing the drop was not as high as anticipated by market watchers, buyers who did not see the drop in June are expected to see it by the end of July.
The Plastics News weekly resin pricing chart showed the drop on July 1.
A variety of forces are causing this market confusion. Ample supplies of PE are available as a result of recent shale-fueled expansions, but PE makers have kept markets relatively snug by exporting as much new material as they can.
At the same time, U.S. tariffs are preventing lower-priced material from reaching North American buyers, giving domestic producers more leverage. Domestic demand, however, has not been overly strong in the first half of the year, putting some bargaining power back into the hands of buyers.
The 3-cent PE price drop — whether seen in June or July — leaves domestic prices flat on a net basis through the first seven months of 2019. Prices had been flat in May after seeing a 3-cent hike in April. Several buyers told Plastics News at the time that they felt the April increase was not warranted by supply/demand factors.
The wave of new U.S. PE capacity is expected to peak this year, with ExxonMobil Chemical, LyondellBasell Industries, Formosa Plastics Corp. USA and Sasol all adding capacity on the U.S. Gulf Coast. Shell Chemical is also expected to open a major new PE unit near Pittsburgh around 2021.